Procurement Integrity

Integrity_ChrisEvansMuch is written lately about “procurement integrity”—many might say this a hot subject, because at times it seems that integrity is somewhat tough to come by in many types of business relationships, but especially when procurement divisions focus only costs.

Tim Cummins addressed this issue in a recent Commitment Matters post, in which he gets to the point very quickly, asking: “Without fundamental change to its goals and purpose, can the typical procurement function really contribute to business integrity?”

He goes on say that a large procurement organization has defined member responsibilities as needing to “enhance and protect” the profession by being ethical and having integrity in all business relationships. Further, those responsibilities should include the “eradication” of unethical business practices such as infringing human rights, fraud, and corruption.

Cummins writes: “On the surface, these are noble aims – yet are they actually effective or relevant? To what extent are current procurement practices (and associated training) undermining the very values that lie at the heart of these responsibilities?”

His answer? The common experience of most suppliers remains that procurement practitioners “are focused almost entirely on price negotiation and obtaining ‘savings’ – far too often with no regard to the impact this will have on quality and, I regret to say, integrity.”

While not questioning the ethics of those professionals, he does question the judgment of organizations that “measure success in such narrow terms.”

So what needs to change?

Even more important and fundamental to this discussion is that seeking to maximize discounts and minimize price “is quite simply not compatible” with the responsibility to act ethically because “it drives unethical behavior; it favors the dishonest supplier; it encourages short-cuts and bullying in the supply chain.”

This is even worse when procurement professionals are rewarded on metrics such as Purchase Price Variance.

Cummins is spot-on because

Procurement professionals should not just talk the ethical talk — that’s too easy: they should walk the ethical walk, with integrity.

Image: integrity by Chris Evans via Flickr cc

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